Tuesday, February 14, 2012

Chasing Tax Credits

As Blue Sky Studios moved to Connecticut for tax credits, so Sony ImageWorks New Mexico leaves for Sony ImageWorks Canada. Which leads to this:

The newly formed Cosgrove Hall Fitzpatrick Entertainment has joined a growing number of animation companies to call on the Government to introduce tax credits to help the industry remain competitive.

Under the Animation UK banner, a host of animation firms are lobbying to get the same production tax breaks as seen in countries including Canada and Ireland. ...

Another name for "tax credit" would be "tax subsidy." There's really no difference between handing some businesses free money to set up shop in your state or your nation, and giving them a tax credit.

And I'm not here to piss and moan about it, but when guvmint cash flows get tight, nations and states take the "tax credit" away. And then the previously-favored company hot foots it to the next haven. It's a never-ending hunt for cash.

And it sometimes ends badly,


M. Brady said...

I was under the impression that Animation UK were just looking to lower costs of production to stimulate production within existing companies as opposed to looking for government subsidies attracting new studios to set up shop.

I can see how this can result in a race to the bottom similar to chasing subsidies, but if high quality production studios like Aardman are struggling to attract business as a result of high costs, what other solutions are there to attract domestic production?

Steve Hulett said...

First, you have to turn out product that makes a lot of money. I don't know about the rest of Aardman's slate, but I don't believe Arthur Christmas did that.

M. Brady said...

Thanks for your reply,

Isn't there a limited market and timeframe in which Christmas movies like Arthur Christmas can turn a profit? Surely DVD sales must be limited to the just before the Christmas period?

So turning out a product that makes a lot a money would attract investment from elsewhere and have companies reinvest the profits in financing their own projects.

But how can we finance such products when production costs are high? Develop a product with such money making potential to justify the costs?

And even if a UK company develops a product or property with money making potential, how do you minimise the risk of broadcasters and investors from shifting production outside to increase profit? Campaign for government quotas or some form of protectionism?

Anonymous said...

What's funny about Sony Canada is they can't get any artists to go to there. Many big studios that opened shop in Vancouver are having terrible times and the work is getting shipped back here more and more. With that now being known less people are willing to make a huge life change to see it go to shit.

A rather important studio opened up shop in Florida because of huge tax breaks and they are begging for people and getting none. They've become a bit of a joke and that where it seems to be going with others.

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